Over the past 10 years Wyndham Destinations Inc (NYSE:WYND) has been paying dividends to shareholders. The company is currently worth US$4.1b, and now yields roughly 4.0%. Should it have a place in your portfolio? Let’s take a look at Wyndham Destinations in more detail.
View our latest analysis for Wyndham Destinations
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is it paying an annual yield above 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has the amount of dividend per share grown over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Wyndham Destinations pass our checks?
Wyndham Destinations has a trailing twelve-month payout ratio of 27%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 30%, leading to a dividend yield of around 4.3%. However, EPS is forecasted to fall to $5.29 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Although WYND’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Compared to its peers, Wyndham Destinations generates a yield of 4.0%, which is high for Hospitality stocks.
Next Steps:
With this in mind, I definitely rank Wyndham Destinations as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three key factors you should further research:
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Future Outlook: What are well-informed industry analysts predicting for WYND’s future growth? Take a look at our free research report of analyst consensus for WYND’s outlook.
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Valuation: What is WYND worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether WYND is currently mispriced by the market.
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Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.